Wed, Jun 19, 2019 - Page 12 News List

Macronix upbeat on Nintendo orders

TRADE ROW:While Huawei is a client, it accounts for less than 10% of the revenue of Macronix, which mainly provides NOR flash memory chips to the Chinese firm

By Lisa Wang  /  Staff reporter, in HSINCHU

Macronix International Co (旺宏電子) yesterday said that stronger-than-expected demand for memory chips from its top client, Nintendo Co, and other new products would fuel growth momentum in the second half of this year, shrugging off the effects of the US-China trade row.

US trade sanctions on Huawei Technologies Co (華為) would barely dent the chipmaker’s shipments to the Chinese company, Macronix said.

The US ban has taken a toll on Huawei, causing its smartphone sales to drop 40 percent over the past month and could cut its revenue by US$30 billion in the next two years, Huawei founder Ren Zhengfei (任正非) told a panel discussion in Shenzhen, China, on Monday.

“Fortunately, we produce very few memory chips for mobile phones,” Macronix chairman Miin Wu (吳敏求) told reporters on the sidelines of the company’s annual general meeting, implying limited impact from the Huawei ban.

While Huawei is one of the Hsinchu-based chipmaker’s top three clients, it accounts for less than 10 percent of its revenue, Wu said.

Macronix primarily supplies NOR flash memory chips used in Huawei’s 5G base stations, he said.

As global trade becomes chaotic due to the trade spat, Macronix is more cautious about the outlook for the second half, Wu said.

“It is certain that the second half would be better than the first half. However, we are not so sure how robust the strength would be,” Wu said, referring to the trade dispute, which has shaken global business confidence and reduced Macronix’s order visibility.

Two months ago, Wu anticipated that the dispute would be over by the end of this month.

However, now, the chances of the world’s two biggest economies resolving the dispute looks slim, he said.

“As uncertainty is high, clients tend to place short-term orders, rather than long-term ones. That makes it difficult for us to make forecasts,” Wu said.

However, orders from long-term client Nintendo “has exceeded our expectations in the past two months,” he said. “Demand is better than we thought.”

Nintendo’s strong demand for ROM memory chips helped boost Macronix’s revenue to NT$2.72 billion (US$86.27 million) last month, up 30 percent from April.

“That is very unusual, as the first and second quarters are usually slow seasons,” Wu said.

To further fuel growth, Macronix plans to mass produce advanced 19-nanometer NAND flash memory chips in the fourth quarter, he said.

The chipmaker has budgeted NT$14.2 billion for new facilities and equipment this year, mostly for 19-nanometer technology.

Shareholders approved a plan to distribute a cash dividend of NT$1.2 per share, representing a 40.49 percent payout ratio based on earnings per share of NT$4.94 last year. That implies a dividend yield of 5.57 percent, based on the stock’s closing price of NT$21.55 yesterday.

This story has been viewed 6607 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top